IOM Rejects Geography-Based Value Index for Medicare

Congress encourage and provide resources for CMS to make accessing Medicare and Medicaid data easier for researchers. CMS should collaborate with private insurers to collect, integrate, and analyze standardized data on spending, clinical and behavioral health outcomes, to enable more extensive comparisons of payments and quality and evaluation of value-based payment models across payers.

Congress should not adopt a geographically based value index for Medicare. Because geographic units are not where most healthcare decisions are made, a geographic value index would be a poorly targeted mechanism for encouraging value improvement. Adjusting payments geographically, based on any aggregate or composite measure of spending or quality, would unfairly reward low-value providers in high-value regions and punish high-value providers in low-value regions.

To improve value, CMS should continue to test payment reforms that incentivize the clinical and financial integration of healthcare delivery systems and thereby encourage their (1) coordination of care among individual providers, (2) real-time sharing of data and tracking of service use and health outcomes, (3) receipt and distribution of provider payments, and (4) assumption of some or all of the risk of managing the care continuum for their populations. Further, CMS should pilot programs that allow beneficiaries to share in the savings due to higher-value care.

During the transition to new payment models, CMS should conduct ongoing evaluations of the impact on value of the reforms included in Recommendation 3 by measuring Medicare spending and beneficiaries' clinical health outcomes. CMS should use the results of these evaluations to iteratively improve these payment models. CMS should also monitor how these reforms impact Medicare beneficiaries' access to medical care.

If evaluations of specific payment reforms demonstrate increased value, Congress should give CMS the flexibility to accelerate the transition from traditional Medicare to new payment models.